Consumer confidence at record low

The continued slump in house prices, soaring food and fuel bills and increasing job losses has seen pessimism among consumers surge further, according to Nationwide's latest survey.

The building society's consumer confidence index dropped to 51 during the month, down from 61 in June, to reach its lowest level since records began in 2004 for a seventh month in a row. Overall consumer confidence was 18% lower than a month earlier and 46% below the same period a year ago when the global credit crunch first emerged.

Consumers' feelings about the current economic situation deteriorated in July after two months of relative stability, Nationwide said.

A record of almost two-thirds of people surveyed, 61%, believe the current climate is bad and 85% are fearful that the situation will be the same or worse in six months' time.

People are also increasingly downbeat over the health of the job market amid news of widespread redundancies in the construction and financial sectors.

The proportion of people believing there will be fewer jobs available in six months' time increased sharply in July to 42%, up from 34% in June, the largest increase so far this year.

Prospects for the ailing housing market, which is suffering the fastest rate of price falls since the early 1990s, also appears bleak.

Consumers now expect prices to tumble by an average of 4.8% in the next six months, a rise from the 3.2% drop forecast a month earlier.

Fionnuala Earley, Nationwide's chief economist, said: "The continuing downward trend in consumer confidence is not surprising given the recent batch of poor economic data. Talk of the increasing chances of a recession, more weakening in the housing market and the continuing rise of food and energy costs will have further dented confidence as will reports of job losses. Falling oil prices and lower fixed mortgage rates offer some good news, but a cut in the bank base rate is still unlikely this summer."